Oil markets look primed for a new up-cycle by 2022, which could culminate in Brent surpassing $80/bbl. This is sufficient to unlock 20% IRRs on the next generation of offshore projects, and thus excite another cycle of offshore exploration and development. Beneficiaries include technology leaders among offshore producers, subsea services, plus more operationally levered offshore oil services. The idea is laid out in our 17-page note.
Our oil market outlook is detailed on pages 2-5, seeing 2Mbpd of under-supply by 2022 and a potential inventory draw of 2.5bn bbls.
>$80/bbl oil prices are needed to instigate a new offshore cycle, as modelled and explained on pages 6-9.
Can’t the next oil cycle be quenched purely by ramping up short-cycle shale, instead of another offshore cycle? We answer this pushback on pages 10-11.
Is another offshore cycle compatible with the energy transition and global decarbonization? We answer this pushback on pages 12-13, with detailed data on CO2 emissions per barrel offshore versus elsewhere.
Who benefits? We present the technology leaders among producers, service companies and emerging technologies on pages 14-17, drawing on our prior patent screens and technical research.